I'm a partner at Redpoint. I invest in Series A and Series B SaaS companies. I write daily, data-driven blog posts about key questions facing startups including how to fund raise, startup benchmarks, management best practices and team building. I co-authored the book, Winning with Data. Join more than fifteen thousand others receiving these blog posts daily by email.


Startup Best Practices 10 - Building Your Startup's Institutional Memory

In 2013 with 40 employees, Stripe adopted email transparency, a policy that makes most emails public to everyone in the company. They posted an update about the success of email transparency in late 2014 with 164 employees. At first blush, it may seem radical to funnel emails of 164 other people to everyone's already overflowing inbox. But it works brilliantly because it creates a policy around Institutional Memory, something very few companies do well.

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The Runaway Train of Late Stage Fundraising

Every morning, it seems like a startup raises a massive growth round. In fact, the data proves the point. In 2014, there were 251 working days and 211 $40M+ growth rounds - just about one per day. In contrast to the frenetic private market, there were 15 US IT venture-backed IPOs with offerings greater than $40M last year, slightly more one IPO per month in 2014. Private market rounds were 16x as common as IPOs in 2014, compared to the 2004-2007 era, when IPOs were about as equally common as large private financings.

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3 Key Ingredients of a Sales Compensation Plan

Like most things in a startup, a sales commission plan should evolve as the company scales. For example, as Mark Roberge, CRO of Hubspot, wrote in The Sales Acceleration Formula, Hubspot adopted three different sales compensation plans throughout its early evolution.

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The 5 Key People in a SaaS Sales Process

Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people

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The Best Book on Building a SaaS Sales Team

If you want to understand how to build a great SaaS sales organization, you should read Mark Roberge's The Sales Acceleration Formula. It's the single best book on the topic. Mark is the Chief Revenue Office at Hubspot, a company which has created tremendous success by perfecting the inbound marketing plus sales model. The book is invaluable for every founder, CEO and member of the management team because it not only explains how the Hubspot sales team is structured, but why the structure came to be.

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The SaaS Company that Grew from 0 to 4M Subscribers in 2.5 Years

In 2.5 years, Adobe has transformed its business from a software license business into a SaaS business. It's been a remarkable transition, and one not talked about very much in the SaaS world. Transitions from licensed software to SaaS are rare. The travel and expense management behemoth, Concur, recently acquired by SAP for $8.3B, is another great example that made the transition first from CD-ROM packaged software, then to enterprise license software and then to SaaS. Above, the line chart shows the astounding growth in the number of Adobe Creative Suite subscribers from the launch of CreativeSuite 6 in mid-2012 through March 2014 growing at 31% per quarter.

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The 5 Marketing Channels of Great SaaS Companies

Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads to for the inside sales team to attain their monthly quota? The Marketing team's mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these generate inbound leads, who often convert at 2-3x the rate of outbound leads. Below are the five marketing channels I've observed at SaaS companies.

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The Forces in Tension in the SaaS Fundraising Market

Over the last 15 months, the typical high growth public SaaS company's multiple has halved. The chart above plots the average enterprise value to forward revenue multiple for established SaaS companies and high growth SaaS companies. High growth companies peaked in February last year at about 22x forward revenues and have fallen to 11x on March 1, 2015. Established companies dropped similarly from 6.6x to 4.5x.

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Why Your Startup's Churn Rate Affects Your Company's Ability to Plan Its Future

Every SaaS company should be focused on mitigating churn because greater retention enables a business to grow far more rapidly, to reduce the cost of customer acquisition, and to slash the amount of capital required for the business to grow. But there's one additional reason to focus on churn: predictability. The more dollar churn a business creates, the less predictable its performance - and vice versa.

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The State of the SaaS Fundraising Market

In a recent survey, 40% of VCs pointed to SaaS as the startup sector most likely to be impacted by a market correction. There's no question that the early stage SaaS founders are benefiting from substantial multiple expansion and pre-money valuation increases. But I was curious about how widespread aggressive investments are in software companies. As the data below shows, the seed and Series A markets have been stable, but Series B rounds have seen a dramatic acceleration recently.

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